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PETROLEUM PRICING FORMULA FROM MARCH

Electricity will wait:
Consistency in taxation and economic policy for next 3 to 5 years:

Deputy Treasury Secretary S.R. Attygalle yesterday assured that the pricing formula on petroleum products would be implemented by March next year.

“You will have the formula for the New Year in April,” he said addressing a post budget discussion organised by the Ceylon Chamber of Commerce.

The electricity formula however is expected to be delayed, as, he said, it was more complicated, given the various subsidies given to electricity consumers.

“A transparent energy pricing formulae and a Budget which would continue the fiscal consolidation process was an important condition stressed on by the IMF through their Extended Fund Facility Programme,” he said.

Attygalle however stated that the pricing formula, be it for energy or alcohol was important to ensure consistency in the taxation policy of the country.

“Our discussions with the chambers informed us that the business community was not looking for concessions but wanted consistency. It is key for any business to know what will happen.

“That is why the Inland Revenue Act was introduced, and, despite pressures for amendments, even before implementation, but we stuck to it,”added the Deputy Treasury Secretary.

A more cautious Senior Economic Advisor to the Finance and Mass Media Ministry Mano Tittawella observed that “Confidence on consistency will only come when we are consistent.”

“This is the rationale behind the motor and alcohol pricing formulae in this Budget,” he added.

Tittawella explained that the Finance Minister Mangala Samaraweera was interested in maintaining a certain level of consistency in taxation and economic policy for at least the next 3 to 5 years.

“We have a problem in this area but we hope to bring in some predictability to business,” he added.

According to Ceylon Chamber of Commerce Chief Economist Shiran Fernando, the lack of implementation of budget proposals over the last few years has resulted in the government on average missing their revenue targets by at least Rs.100 billion every year.

“What was announced was not what happened. Thus, naturally there were pressures on the budget deficit,”he quipped. The new Inland Revenue Act, he said, would bring in most of the government revenue next year as he stressed that if the government was able to implement at least 60-80 percent of their proposals, they would be able to meet 16 percent of their growth targets.

Tittawella added that the Budget Implementation Unit, to be set up at the Finance Ministry, would actively follow up on proposals and inform the general public on the progress of projects which have the greatest impact on income and expenditure of the government.